Housing Law Bulletin - NHLP Dec 05 Bull_FINAL.pdfDubbed the Green Book by users across the country,...

Housing Law BulletinVolume 35 • November/December 2005

Published by the National Housing Law Project

Housing Law Bulletin • Volume 35

HUD Housing Programs: Tenants’ Rights

NHLP’sRD3

EDITION

E X P A N D E D

UPDATED

COMPREHENSIVE CURRENT AUTHORITATIVE

AN ESSENTIAL RESOURCE FROM THE NATIONAL HOUSING LAW PROJECT

Originally

published in 1981,

NHLP’s Green Book

has proven indispensible

to housing law

practitioners across

the country.

CD ROM

The 3rd Edition of the Green Book features a complimentary CD-ROM that contains a searchable table of more than 2,000 cases. It also contains full PDF texts of selected hard-to-fi nd documents referenced in the manual, including HUD circulars, notices, forms, memoranda and unreported court opinions.

SPECIAL FEATURE

Dubbed the Green Book by users across the country, HUD Housing Pro-grams: Tenants’ Rights is a comprehensive, issue-oriented guide to the fed-eral housing programs. Last published in 1994, the 3rd Edition has been reworked, updated and expanded to cover recent sweeping changes from Congress, HUD and the courts.

It is the only book that explains and analyzes all applicable laws central to effectively representing tenants assisted under the HUD programs. In a single volume, it provides a practical road map through the complexity of the fed-eral housing programs, including public housing, subsidized rental housing, vouchers, section 8 homeownership, and others. Evictions, resident participa-tion, loss of units and other key issues are covered in depth as well.

Meticulously researched and clearly written by expert NHLP staff at-torneys and outside contributors, the Green Book is a unique and and invaluable resource for anyone working within the scope of the federal housing programs: • attorneys and paralegals

• fair housing and other public interest advocates

• HUD offi ces

• public housing authorities

• nonprofi t housing and community organizations

• private owners and managers

• local and state housing agencies

• housing policy organizations and policymakers

• clinical law programs and law libraries

The 3rd Edition contains the most recent applicable authorities for virtually all common problems encountered in a federal housing landlord-tenant relationship, including state and federal cases, federal statutes and regulations, and HUD Handbooks, Notices and opinion letters.

HUD Housing Programs: Tenants’ Rights is available now. See the Publication Order Form for prices.

Housing Law Bulletin • Volume 35 Page 249

Utility Allowance Adjustments:How Housing Advocates Can Proactively Address

Skyrocketing Energy CostsOver the last few weeks the cumulative effect of Hur-

ricanes Katrina and Rita has been chronicled by numerous television and print sources, focusing on the general dev-astation to the region and the cost of rebuilding. However, only a few of these same media sources have begun to address a related topic which will have much broader geo-graphic and fi nancial consequence to low-income families—the hurricanes’ impact on short-term energy costs.

On the eve of the 2005-2006 heating season (Octo-ber through March), industry forecasts projected that the additional costs associated with restoring Gulf Coast oil and natural gas production, oil refi ning, and natural gas processing will further strain the already-tight natural gas and petroleum product markets. Consequently, this win-ter’s residential space-heating expenditures are expected to increase for all fuel types compared to last year’s lev-els. Specifi cally, government offi cials are forecasting an almost 50% increase in natural gas consumer prices and an approximately 30% increase for heating oil over last winter.1 As a result, this winter’s unchecked home-heating costs will surely have a substantial impact upon the afford-ability of shelter and play a critical role in the low-income household’s budget, along with direct housing costs.

Some tenants may benefi t from the federal Low-Income Energy Assistance program, although the Con-gressional leadership has targeted that program in its efforts to cut spending to provide tax cuts. Even those tenants fortunate enough to benefi t from federal housing assistance will experience signifi cant additional fi nancial strain from imminent utility cost spikes. Therefore, for those programs, it is imperative that advocates take full advantage of the rules and procedures for reviewing and adjusting utility allowances to alleviate the impacts of these rising costs for subsidized housing residents.

Utility Allowances: Background

To keep assisted housing affordable for lower-income households, the United States Housing Act directs that the resident’s share of rent in most federally assisted housing programs usually be limited to no more than 30% of the household’s adjusted monthly income.2 In interpreting

1ENERGY INFORMATION ADMINISTRATION, SHORT-TERM ENERGY OUTLOOK AND WINTER FUELS OUTLOOK (2005).242 U.S.C.A. § 1437a(a) (West Supp. 2003).

The Housing Law Bulletin is published 10 times per year by the National Housing Law Project, a California nonprofi t corpora-tion. Opinions expressed in the Bulletin are those of the authors and should not be construed as representing the opinions of policy of any funding source.

A one-year subscription to the Bulletin is $175.Inquiries or comments should be directed to Eva Guralnick,

Editor, Housing Law Bulletin, at the National Housing Law Project, 614 Grand Avenue, Suite 320, Oakland, CA 94610, Tel: (510) 251-9400 or via e-mail to [email protected]

Table of ContentsUtility Allowance Adjustments:

How Housing Advocates Can Proactively Address Skyrocketing Energy Costs .....................249

Third Circuit Requires Philadelphia Housing Authority to Increase Utility Allowance for Rate Hikes .......................................252

RHS FY 2006 Appropriations Act Funds Rural Tenant Protection Vouchers .........................253

PHAs to Reimburse Nationwide Class of Enhanced Voucher Holders ....................................256

Post-Rucker Decisions: Three Years Later ................257Recent Cases ................................................................263Recent Housing-Related Regulations and Notices ..264

AnnouncementsNew Report on Winning Construction Jobs ...........253Publication List/Order Form ....................................267

Page

Housing Law Bulletin

Volume 35 • November/December 2005

Published by the National Housing Law Project 614 Grand Avenue, Suite 320, Oakland CA 94610Telephone (510) 251-9400 • Fax (510) 451-2300

727 Fifteenth Street, N.W., 6th Fl. • Washington, D.C. 20005

www.nhlp.org • [email protected]

Cover: Residents at Mandela Gateway, a 168-unit mixed-income, mixed-use development completed in 2005 by the Oakland Housing Authority and BRIDGE Housing, a California developer of affordable housing. Photo courtesy of the Oakland Housing Authority.

Housing Law Bulletin • Volume 35Page 250

the statute, the Department of Housing and Urban Devel-opment (HUD) has always defi ned the tenant rent contri-bution to include both shelter and the costs for reasonable amounts of utilities.3 Where utilities are tenant-paid, an amount that a public housing authority (PHA) or Section 8 project owner determines necessary under the rules to cover the resident’s reasonable utility costs is the “utility allowance,” which is generally credited against the ten-ant’s share paid to the owner, for those tenants paying an income-based rent.

Utility allowances are based on an estimate of the rea-sonable cost of different types of utilities, depending upon the quantity allowed in light of their end uses.4 The cov-ered utilities requiring allowances, if tenant-paid, include electricity, natural gas, propane, fuel oil, wood or coal, and water and sewage service, as well as garbage collec-tion. The functions, or end-uses, covered by an allowance include space heating, water heating, cooling, refrigera-tion, lighting, or appliances, but not telephone or cable TV service. Utility allowances can be small or large, ranging from less than $20 to over $200 monthly, depending on the PHA, the climate zone, local utility rates, the number of utilities and uses covered, and the dwelling unit and/or household size.

3See, e.g., Tenant Allowances for Utilities, 49 Fed. Reg. 31,399, 31,400 (Aug. 7, 1984); Wright v. Roanoke Redev. & Hous. Auth., 479 U.S. 418, 420 (1987).4See generally NHLP, HUD HOUSING PROGRAMS: TENANTS’ RIGHTS, ch. 6 (3d ed. 2004).

5E.g., 24 C.F.R. § 965.507(a) (2005) (PHAs); 24 C.F.R. § 880.610 and 881.601 (2005) (project-based Section 8 program); 24 C.F.R. § 982.517(c) (2005) (housing choice voucher program). Utility allowances for those ten-ants paying income-based rents in RHS Section 514 and 515 properties (i.e., those with rental assistance or paying in excess of the minimum basic rent) present the same problem, but are covered by different rules. 7 C.F.R. §§ 3560.202 and 3560.205 (2005).6E.g., 24 C.F.R. § 965.507(b) (2005) (PHAs); 24 C.F.R. § 880.610 and 881.601 (2005) (project-based Section 8 program); 24 C.F.R. § 982.517(c) (2005) (housing choice voucher program). The RHS regulations apparently lack a 10% rate increase trigger.7For a more thorough discussion, including fi ve hypothetical tenant scenarios, see Michael L. Hanley, Effect of Utility Allowance Increases on Section 8 Housing Choice Voucher Participants, at http://www.gulpny.org/Housing/Utility-Allowances.html (last visited Oct. 21, 2005).8Id.9The LIHTC maximum allowable rent calculation, like HUD affordable housing programs, includes an allowance for costs to be paid by the tenant for utilities inclusive of heat, electricity, air conditioning, water, sewer, oil or gas where appropriate. 26 U.S.C.A. § 42(g) (2005).10Internal Revenue Service regulations (26 C.F.R. § 1.42-10 (2005)) estab-lish the following guidance: for buildings assisted by Rural Development

Nevertheless, in order to maintain the resident’s rent-to-income share within the statutory limit, the PHA (for public housing and vouchers) or Section 8 project owner must review the utility allowance schedule at least annually.5 In addition, if the applicable utility rates have increased by 10% or more since the previously established or adjusted allowance, the PHA or Section 8 owner must immediately increase the utility allowance accordingly.6 Unfortunately, in reality, this later adjustment often fails to occur in a timely fashion, thus leaving the tenant with the burden of paying any cumulative rate increase until the next adjustment.

For voucher tenants, the voucher program’s structure may impede certain tenants from realizing the full benefi t of a properly adjusted allowance. Voucher participants receive no dollar benefi t from increases in the allowance once the sum of the rent paid to the owner plus the utility allowance exceeds the current payment standard estab-lished by the PHA.7 Households will only benefi t where their “gross rent” (which includes the utility allowance) is less than the local voucher payment standard.8 There-fore, utility allowance increases without a corresponding increase in the payment standard may only be of help to a limited number of households.

Utilities in Low Income Housing Tax Credit (LIHTC) units present yet another wrinkle. The LIHTC program requires that the statutory maximum rents (expressed as a percentage of area median income for a hypothetical fam-ily size derived from the number of bedrooms) include a utility allowance for any tenant-paid utilities.9 The util-ity allowance to be deducted, however, is often deter-mined by some public agency, depending on the type of property involved.10 Where units or tenants are not


regulated or assisted, the “PHA utility allowance” must be used, unless either the owner or the tenant has obtained an allowance from the local utility provider under speci-fi ed procedures.11 Changes in the allowance are to be effec-tive within ninety days.12 Thus, for LIHTC units, increased allowances directly reduce an owner’s rental income dol-lar for dollar, while offering no prospect of increased pub-lic subsidy from federal appropriations. As a result, the LIHTC owner has little incentive to ensure that the other agencies involved make timely increases to utility allow-ances, or that allowances initially obtained from utilities themselves are properly adjusted for rate increases.

Steps Advocates Can Take Now

Facing these looming rate increases, advocates work-ing with federal housing tenants should now consider tak-ing the following steps to alleviate the imminent fi nancial burdens for millions of low-income families this winter.

• Advocates should contact their local utilities provid-ing natural gas, electricity and fuel oil to verify the effective date of any scheduled rate increases.13

• Next, contact the PHAs and private Section 8 and LIHTC property owners to ascertain their plans for the prompt utility allowance adjustments required by federal law, especially those in the HUD programs for rate increases in excess of 10%.

• For voucher tenants, advocates should adopt the two-step approach of reviewing the adequacy of their utility

(RD), formerly FmHA, the RD-approved utility allowance must be used; for HUD-assisted buildings, the HUD-approved allowance. If a tenant has a voucher, then the PHA’s voucher utility allowance must be used. If neither HUD or RD assists the building, and the tenant lacks a voucher, the utility allowance may be obtained from the local PHA or from the local utility provider. The LIHTC statute (26 U.S.C.A. § 42(g) (2005)), however, requires owners to use the allowance under “Section 8,” which arguably means either the PHA’s voucher allowance or the allowance used by neighboring project-based Section 8 developments.1126 C.F.R. § 1.42-10(b)(4)(ii) (2005).1226 C.F.R. § 1.42-10(c) (2005).13Historical utilities price information, sorted by region and/or major metropolitan area, is available through the Bureau of Labor Statistics and can found at http://www.bls.gov.

14The regulations state that each “PHA may establish the payment stan-dard amount for a unit size at any level between 90 percent and 110 percent of the published FMR for that unit size. HUD approval is not required to establish a payment standard amount in that range (‘basic range’).” 24 C.F.R. § 982.503(b)(1)(I) (2005). In order for the PHA to estab-lish their payment standard outside the “basic range” they must request HUD approval; and HUD has the sole discretion of granting or denying this approval. 24 C.F.R. § 982.503(b)(2) (2005).1524 C.F.R. § 982.507 (2005).16See generally Wright v. Roanoke Redev. & Hous. Auth., 479 U.S. 418 (1987) (recognizing tenants’ § 1983 claim to challenge improper utility allowances in public housing).

allowances while simultaneously urging PHAs to increase their respective payment standards—keeping in mind the fact that each PHA has sole discretion to increase payment standards up to 110% of the pub-lished Fair Market Rent, and possibly higher.14 More-over, the PHA’s affi rmative mandate to maintain a “reasonable rent” for voucher holders15 warrants a concomitant increase in the payment standard.

Analyzing Historical Energy Cost Increases and Required Utility Allowance Adjustments

While attention to this winter’s allowances is critical in light of the 2005-2006 projected heating costs, advocates should remain aware of the opportunity to pursue the issue on a broader scale—analyzing allowances and rates, and seeking reimbursement for previously inadequate allowances.16 Look for additional articles in the Bulletin or for materials posted on the NHLP Web site addressing these issues in greater detail. n

Advocates working with federal housing tenants should now consider taking the

following steps to alleviate the imminent fi nancial burdens for millions of low-income families this winter.


Third Circuit Requires Philadelphia Housing Authority to Increase Utility Allowance

for Rate Hikes1

The United States Court of Appeals for the Third Cir-cuit recently issued an extremely important decision on the calculation of utility allowances in public housing. The court’s ruling holds promise for all federally assisted housing in this period of imminent post-Katrina skyrock-eting utility bills. McDowell v. Philadelphia Hous. Auth., 423 F.3d 233 (3d Cir. 2005).

The appellate decision involved a long-running case in which tenants had sued the housing authority in 1997 pursuant to 42 U.S.C. § 1983 for its failure to adjust its utility allowances for rate increases as required by fed-eral law. After certifi cation of a tenant class, the parties executed a settlement agreement, which was incorporated into a consent decree under the continuing jurisdiction of the district court. The settlement essentially required the housing authority to follow the federal regulations for the annual review and adjustment of allowances, including the requirement to revise allowances when utility rates increase by 10% or more from those used to calculate the prior allowances.

When natural gas rates increased in December of 2000 by 11%, and then increased again one month later, tenants repeatedly requested an allowance adjustment but the Philadelphia Housing Authority refused to act. The tenants, represented by Community Legal Services, fi nally sought to enforce the consent decree through a civil contempt motion in October of 2002. The parties again reached another settlement two months later, with increased allowances effective January 1, 2003, but no resolution of the tenants’ request for sanctions during the two-year period of noncompliance.

The district court subsequently denied the tenants’ motion, fi nding no showing of any actual provable injury

1Much of this article is based on an analysis by Roger D. Colton, of Fisher, Sheehan and Colton (FSC) in Boston, about whom more can be found at http://www.fsconline.com.

2The court’s conclusion on this point was reinforced by the extrinsic evi-dence provided by HUD’s regulations that require prior notice of adjusted allowances, except in the case of those required for rate increases. See 24 C.F.R. § 965.502(c) (2005).3423 F.3d at 241.4Compare 423 F.3d at 238, with 24 C.F.R. § 965.507(b) (2005) (PHAs); and 24 C.F.R. §§ 880.610 and 881.601 (2005) (project-based Section 8 program); and 24 C.F.R. § 982.517(c) (2005) (housing choice voucher program).5423 F.3d at 241.6Id.

from the violation of the decree. This fi nding was based upon its acceptance of the Philadelphia Housing Author-ity’s revised gas consumption calculations for the period between 1999 and 2002, which retroactively decreased the base allowances, more than offsetting the impact of the rate shortfalls. Thus, the district court accepted the hous-ing authority’s contention that tenants were owed nothing despite its admitted violation of the consent decree and rate regulations.

On appeal, the Third Circuit, with Supreme Court nominee Judge Alito writing for the panel, rejected this position out of hand. Using contract principles to construe the terms of the consent decree, the court found its terms unambiguous, requiring and permitting only prospective adjustments.2 The court stated:

When [the utility provider] raised its rates, the tenants were entitled under paragraph 8 of the decree to have their allowances recalculated based on the increased rates and the consumption fac-tor in effect at the time. The difference between the allowances so calculated and the allowances the tenants received is the loss the tenants suffered and the benefi t the PHA reaped as a result of the latter’s contempt.3

This reasoning is directly applicable to millions of fed-erally assisted tenants because, although the regulatory citations vary, the conditions set forth in paragraph 8 of the consent decree are largely the same as those embod-ied within HUD’s utility allowance regulations for all of its programs.4 Therefore, when utility rates go up, “ten-ants [a]re entitled. . . . to have their allowances recalcu-lated based on the increased rates and the consumption factor in effect at the time.”5 If a housing authority or property owner does not do this, “the difference between the allowances so calculated and the allowances the ten-ants received is the loss the tenants suffered.”6 That loss is “actual provable injury” to be assessed against the non-complying public housing agency or owner.

Consequently, the utility allowances provided to pub-lic and assisted housing tenants throughout the country over the past several years warrant careful scrutiny, as natural gas, fuel oil and electricity prices have increased

The court’s ruling holds promise for all federally assisted housing in this

period of imminent post-Katrina skyrocketing utility bills.


substantially. Inadequate utility allowance adjustments effectively result in hundreds of millions of dollars of rent overcharges in the subsidized housing programs.7 Indeed, the Philadelphia case alone involved overcharges esti-mated at more than $4 million. The recently announced rate hikes by many utility companies as a result of the hurricane’s interruption of supplies only heighten the urgency of prompt review, analysis, and remedial action on this problem. n

7See generally NHLP, Shifting Affordable Housing Cost Burdens to Tenants: A Historical Perspective, 35 HOUS. L. BULL. 8, 9 (2005).

1Pub. L. No. 109-97 (Nov. 10, 2005).2MAKING APPROPRIATIONS FOR AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES PROGRAMS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2006, AND FOR OTHER PURPOSES, H.R. Rep. No. 109-255 (2005) (hereinafter H. Rep. No. 109-255).

RHS FY 2006 Appropriations Act Funds Rural Tenant

Protection VouchersThe housing programs of the Rural Housing Service

(RHS) will receive funding for Fiscal Year 2006 (FY06) comparable to that they received in FY05, despite the Administration’s continuing efforts to substantially cut funding for the agency’s housing programs, particularly its Section 515 rental housing program. More signifi cantly, the legislation authorizing appropriations for RHS, which was signed into law on November 10,1 contains several provisions for new programs authorizing the agency to protect residents against displacement when an owner prepays a Section 515 loan. It also contains funding and an authorization for the agency to begin restructuring its existing Section 515 inventory in order to ensure its con-tinued fi scal and physical viability.

Housing Programs FY06 Funding

Funding for the RHS housing programs is considered by the House and Senate Agricultural Appropriations committees. Both committees adopted FY06 funding rec-ommendations for the RHS housing programs and the House and Senate approved those recommendations ear-lier this year. Because the House and Senate recommenda-tions differed, a House and Senate conference committee was formed to reconcile the differences and to make fi nal recommendations to both chambers of Congress. The con-ference committee met in late October and issued a con-ference report that, in practically every case, adopted the higher funding level approved by either the House or Sen-ate.2 In most instances, the conference committee’s recom-mendations are identical to the programs’ FY05 funding levels and substantially higher than those sought in the Administration’s FY06 Budget, which was sent to Con-gress in February of this year.

The table on the following page shows the enacted FY06 agricultural appropriations and compares them to last year’s actual funding level and the Administration’s funding request.

The conference committee’s approved recommenda-tions were passed by the House on October 28, and by the Senate on November 3, 2005. The President signed the bill

New Report on Winning Construction Jobs

The Brennan Center for Justice recently pub-lished a new report entitled Winning Construction Jobs for Local Residents: A User’s Guide for Commu-nity Organizing Campaigns that discusses a fi ve-step strategy that community advocates can use to create and/or retain high-quality construction jobs for their local residents—especially women and people of color. The report draws upon the successes and setbacks experienced in campaigns throughout the U.S.—including campaigns in New York, Hartford, Los Angeles and Seattle—and focuses attention on what has worked best and what should be avoided.

The fi ve-step approach outlined in Winning Construction Jobs includes: (1) identifying the right target; (2) getting a seat at the table; (3) sup-porting high-road contractors; (4) implementing pre-apprenticeship training; and (5) monitoring outcomes. Through this fi ve-step framework, the report provides an analysis of the core stakeholders and potential allies in a construction jobs campaign, descriptions of existing programs, and detailed explanations of legal tools necessary to get the agreements in writing. Overall this report provides an insightful look into many of the strategies that have proven to be successful for a number of com-munity advocates in their fi ght for economic equal-ity in some of our nation’s most under-represented communities.

The report is available online at www.brennancenter.org/programs/downloads/constructionjobs.pdf.


on November 10. Final passage of the bill notwithstand-ing, funding for all of the RHS programs, as well as all other discretionary federally funded programs, is likely to be trimmed ultimately as a result of Congress’ efforts to cut overall discretionary spending and offset the fund-ing commitments made for the Gulf Coast hurricanes and other purposes. If the cuts are made, they are likely to come as part of an across-the-board cut in federal discre-tionary spending, which may be approved either as part of an omnibus appropriations bill or as a separate bill after all the federal appropriations bills have been passed by Congress.

Vouchers for Residents of Prepaid Section 515 Developments

The appropriation bill has some very signifi cant developments for persons interested in Rural Rental Housing and Rural Rental Housing Preservation. For the fi rst time, it includes funding for Rural Housing Vouchers, which have long been authorized under Section 542 of the Housing Act of 1949,3 but never funded. The authorizing legislation contemplated that the Rural Housing Voucher program would operate in rural areas much like the HUD

342 U.S.C.A. §1490r (West 2003).

4H. Rep. No. 109-255, at 20-21.5Id. at 20. 6Id. at 20-21.7Codifi ed at 42 U.S.C. § 1472(c) (2003). In its budget request, the Admin-istration estimated that if 10% of the Section 515 housing stock were to

Rural Housing Service Housing Programs Funding(All fi gures in millions of dollars)

Program FY06 Ag. Approp. FY05 ActualAdministration’s FY06 Proposal

Single Family Home Loans (§ 502 direct) 1140.8 1140.8 1000

Single Family Home Loans (§ 502 guaranteed) 3681 3309 3474

Home Repair Loans (§ 504) 35 35 36

Home Repair Grants (§ 504) 31 31 30

Rental Housing Loans (§ 515) 100 100 27

Farm Labor Housing Loans (§ 514) 38 42 38

Farm Labor Housing Grants (§ 516) 14 16 14

Rental Assistance subsidy 653 592 650

Rural Rental Vouchers 16 0 214

Guaranteed Rental Housing Loans (§ 538) 100 100 200

Housing Preservation Grants 10 9 10

Preservation Demonstration Loans 2.97 0 3

Rental Housing Restructuring 9 0 0

Self Help Technical Assistance Grants (§ 523) 34 34 34

Housing Choice Voucher program. The agricultural appro-priations bill, which authorize $16 million for the program, limits its use to protecting residents of Section 515 Rural Rental Housing whose owners have prepaid their loans after September 30, 2005.4 It establishes the funding level for individual vouchers as the difference between “com-parable market rent for the [prepaid] section 515 unit and the tenant paid rent for such unit.”5 It also directs that the Secretary of Agriculture “shall, to the maximum extent practicable, administer such vouchers with current regu-lations and administrative guidance applicable to section 8 housing vouchers administered by the Secretary of the Department of Housing and Urban Development.”6

While the $16 million appropriation for the rural voucher program is clearly insuffi cient to run a major voucher program, particularly if the Administration pushes for the removal of the prepayment restrictions imposed by the Emergency Low Income Housing Preser-vation Act of 1987 (ELIHPA),7 the funding will allow RHS


to start up a voucher program and to address various administrative issues as to how it will be run. For exam-ple, one of the fi rst decisions that the agency will have to make is whether it will administer the voucher program directly or if it will contract with local housing authorities or state agencies to run the program. RHS Administrator Russell Davis estimates that the $16 million appropriation will fund approximately 3,500 vouchers.

Nonprofi t Prepayment Due Diligence Grants

The appropriations bill also adopts a recommendation of the National Rural Preservation Task Force, formed by the Housing Assistance Council and the National Hous-ing Law Project, to increase the grants that are available to nonprofi t and public organizations that are consider-ing the purchase of a Section 515 development that the owner is planning to prepay. For the last several years the appropriations bills have limited due diligence grants to $25,000. Participants in the National Rural Preservation Task Force reported that the amount was not suffi cient and recommended increasing it to $50,000. The Agricul-tural Appropriations bill follows that recommendation.8

Restructuring and Revitalization Authorization

The FY06 appropriations act also authorizes $9 mil-lion for a new demonstration program for the restruc-turing and revitalization of existing Section 515 housing projects. This demonstration program is intended to pro-vide RHS with the authority to begin to implement the restructuring and revitalization proposals contained in the Comprehensive Property Assessment report that was

be prepaid over the next three years, it would require a $642 million dollar voucher program to protect the residents. To meet that need, the Administration proposed that $214 million be appropriated for the program in each of the next three fi scal years. Congress did not adopt the Administration’s proposal because it never provided Congress any information as to how it calculated its needs or how it proposed to run the voucher program. Accordingly, the House and Senate Appropria-tions committees ignored the Administration’s request. Realizing that it may be useful to initiate a protection program for residents of Section 515 housing comparable to what exists for residents of HUD housing, the Senate Agricultural Appropriations Committee proposed the $16 million program on its own.8H. Rep. No. 109-255, at 20.

9Id. at 19-20.10Id. at 21.

released by the Department of Agriculture in November 2005. That report concluded that the Section 515 housing stock will need physical revitalization if it is to continue to serve the needs of low-income households for the remain-ing balance of the properties’ mortgage term. Because existing project reserve accounts are generally insuffi cient to undertake that revitalization, the report recommended that RHS restructure the outstanding loans to enable own-ers to upgrade the properties. The appropriations bill authorizes RHS to use the $9 million to reduce or elimi-nate interest rates on existing loans, defer loan payments, subordinate loans, reduce or reamortize existing debt, and to provide other forms of assistance, such as advances or incentives, authorized by the Secretary.9

The appropriations act also makes $1 million avail-able for RHS to contract with third parties to acquire nec-essary automation and technical services to restructure Section 515 loans. It is not clear from the report whether this allows RHS to contract with private parties to actu-ally carry out the restructuring, as was done by HUD, or to simply purchase technical services to facilitate RHS’ capacity to undertake the restructuring.

Rural Preservation Demonstration

Finally, the appropriations act authorizes $2.97 million for the continuation of the Rural Housing Preservation Demonstration program, funded for the fi rst time in FY05. Under that program, RHS provided low-cost thirty-year loans to third party intermediaries for the preservation of Section 515 housing. While it is not yet clear exactly how these intermediaries will use the funds, the FY06 appro-priations makes additional funding available under the program.10

Conclusion

The FY06 RHS appropriations legislation is a pleas-ant surprise in that it marks a clear departure by Congress from the Administration’s efforts to continue to eliminate or reduce funding for the RHS housing programs. In light of the fact that next year’s appropriations bill is likely to be considered, if not passed, just before the mid-term elec-tions, it is likely that funding for the RHS housing pro-grams will remain level for yet another year. Moreover, Congress’ willingness to protect residents of Section 515 housing against displacement when owners prepay their loans is also a welcome and long overdue development. It remains to be seen how the Administration will propose to implement this new authority. NHLP plans to publish reports on new developments in the RHS voucher pro-gram in future issues of the Housing Law Bulletin. n

The FY06 RHS appropriations legislation is a pleasant surprise in that it marks a clear departure by Congress from the Administration’s efforts to continue to

eliminate or reduce funding for the RHS housing programs.


PHAs to Reimburse Nationwide Class of Enhanced

Voucher HoldersAs a result of the settlement of a nationwide class

action challenging the failure of the Department of Hous-ing and Urban Development to adjust voucher subsidies provided after certain mortgage prepayments during the late 1990s,1 PHAs should now be taking steps to identify and reimburse affected class members. HUD has issued two notices advising public housing agencies (PHAs) of the settlement and their duties to identify tenants who should have received subsidy adjustments and provide them with lump-sum reimbursements or rent credits.2

Taylor had challenged as contrary to statute HUD’s failure to adjust voucher payment standards for certain tenants residing in certain HUD-subsidized properties pre-paid between Fiscal Years (FYs) 1997-1999.3 The affected tenants are those who (1) received so-called “preserva-tion vouchers” to subsidize the new higher post-prepay-ment rents, but (2) were then denied additional subsidy increases to cover subsequent rent increases at the property, levied after one year from the prepayment that triggered their voucher eligibility.

Because of the 1999 statutory clarifi cation, the only prepayment voucher tenants who were entitled to reim-bursement are those with unadjusted voucher subsidies between FYs 1997-1999.4 The Taylor settlement does not affect (1) those tenants who received enhanced vouchers as a result of Section 8 opt-outs; or (2) tenants who moved

1Taylor v. Jackson, No. 02-CV-1120AA (D. Ore. fi led 2002). 2HUD Notice PIH 2005-10 (Mar. 23, 2005) and HUD Notice PIH 2005-24 (July 8, 2005), available at http://www.nhlp.org/html/pres/casedocs.cfm?id=800030.3For more background on the case, see NHLP, Settlement Reached in Enhanced Voucher Class Action, 35 HOUS. L. BULL. 147, 163 (June 2005). Pleadings and settlement documents in the case are available (the lat-ter without a password) from NHLP’s Web site at http://www.nhlp.org/html/pres/casedocs.cfm?id=800030. One federal court had upheld such a claim on behalf of the tenants at one Minnesota property, 215 Alli-ance v. Cuomo, 61 F. Supp. 2d 879 (D. Minn.1999). See NHLP, Minnesota Section 8 Tenants Win Major Preservation Victory, 29 HOUS. L. BULL. 161, 161 (1999). In 1999, Congress clarifi ed the statute, Pub. L. No. 106-74, § 538(a), 113 Stat. 1122 (Oct. 20, 1999) (codifi ed at 42 U.S.C. § 1437f(t)), while specifi cally contradicting HUD’s interpretation. H.R. Rep. 106-286, 106th Cong., 1st Sess., at 22 (Aug. 3, 1999). HUD implemented this change only prospectively, HUD Notice PIH 2000-09 (Mar. 7, 2000), thus continuing the harm challenged in Taylor.4Tenants who received a preservation voucher upon prepayment during the relevant period and remained in place should have had their assis-tance converted to an “enhanced voucher” at their fi rst annual recertifi -cation following enactment of the enhanced voucher statute on October 20, 1999, thus terminating their harm.

5HUD, Notice PIH 2005-24 (July 8, 2005), available at http://www.nhlp.org/html/pres/casedocs.cfm?id=800030.6http://www.hud-enhanced-vouchers.org. Some of the legal documents may still not be posted there, but may be obtained from NHLP’s Web site at http://www.nhlp.org/html/pres/casedocs.cfm?id=800030.7The list is posted both on NHLP’s Web site at http://www.nhlp.org/html/pres/casedocs.cfm?id=800030 and at www.hud-enhanced-vouchers.org. The Excel fi le can be sorted in various ways. Note that for approximately 100 properties, there is not yet any further identifying information beyond what HUD fi rst provided (e.g., no address, city or state), so advocates should scroll through those at the end to see if they recognize either the property name or PHA involved.

after receiving their “preservation voucher” but prior to such a subsequent rent increase (because their subsidy would have then become subject to ordinary voucher pay-ment standard rules).

Implementing the Settlement

Pursuant to the settlement terms, HUD issued a sec-ond specifi c directive to all PHAs,5 requiring each PHA that issued preservation vouchers during the affected period to identify those class benefi ciaries still receiving voucher assistance no later than each tenant’s next annual recertifi -cation. Absent a narrow exception, the notice then directs the PHA to determine the appropriate reimbursement and make payment through either a lump sum or rent credits. Former preservation voucher tenants who subsequently moved who now seek a determination of eligibility would have to apply to the PHA that issued their preservation voucher for that determination. If eligible, the PHA must reimburse them through a lump sum payment.

Local housing advocates can help affected tenants by ensuring that HUD and PHAs follow the terms of the set-tlement. A Web site6 now provides most of the information needed by advocates and claimants. However, advocates will still have to determine whether tenants are entitled to reimbursements, by taking the following steps.

Step #1: Review the currently updated list of affected properties, to see if there are any local properties and tenants in your service area. In lieu of the cryptic list attached to HUD’s fi rst notice, Plain-tiffs’ counsel has developed and posted the cur-rent list of affected properties with more identify-ing information, such as address, city and state,7 to help identify affected properties in specifi ed states or cities. Note that this list only identifi es those properties that HUD has agreed are potentially affected—others may be subsequently identifi ed. If the affected properties are not located within your service area but within that of someone you know, please contact them and pass along this information.


8HUD’s list is included as Attachment A to Notice PIH 2005-24 (July 8, 2005). 9See 24 C.F.R. § 982.308(g)(4) (2005).

Based on HUD data on terminated mortgages, Plaintiffs’ counsel initially estimated that tenants in 620 properties containing almost 60,000 units were possibly affected by HUD’s no-adjustment policy. HUD, however, has so far identifi ed only approximately 430 properties as having housed tenants receiving preservation vouchers,8 with far fewer vouchers than units having actually been made available. Plaintiffs’ counsel is currently reviewing with HUD the apparent discrepancy of approximately 190 properties with about 16,000 units, as well as the shortfall of at least 26,000 vouchers issued, even in just a partial subset of the properties already acknowledged as covered by HUD. Once the correct number and identity of affected properties and vouchers is determined, it is still necessary to determine at the local level how many of those properties and tenants expe-rienced a subsequent rent increase and a resulting improper subsidy determination.

Step #2: Determine whether there was an unsubsidized rent increase. In order to establish tenant eligibility for reimbursements at these prepaid properties, there must have also been a second rent increase that was not covered by increased voucher sub-sidy payments. This second rent increase will probably have to be established by making an inquiry of the tenants, PHA and/or project man-agement. PHAs should know whether this hap-pened because voucher owners must notify the PHA of rent increases,9 although their records may be hard to fi nd unless affected tenants remain on their voucher program. The resident manager of a development may also have this information.

Step #3: Calculate the reimbursements due to eligible tenants. This should involve straightforward arith-metic—adding up the amount of rent increase(s) levied by the owner that were not covered by increases in the voucher subsidy and multiply-ing them by the number of months that they were effective.

Step #4: Address any PHA resistance to making the payments. Under Notice 2005-24, a PHA may only make payments or credits to the extent that it has suffi cient budget authority available under its Annual Contributions Contract, and cannot

10See HUD Notice PIH 2005-24, at 6-7. 11Id. Even if a PHA has no immediately available funding to pay reim-bursements (counting reserves), the draft directive’s language (“reserves resulting from turnover”) suggests that funds freed up upon voucher turnover must be used for this purpose. For information on each PHA’s current funding levels, see the Center on Budget and Policy Priorities Web site at http://www.cbpp.org, or the January 21, 2005, letter sent by HUD to each PHA. Information about reserves must be obtained locally from each PHA.

make any payments or adjustments if they would “jeopardize continued assistance for other current voucher participants.”10 Payments can be delayed until funds become available. Although this excep-tion should thus be limited to those rare situations where making payments would require a current voucher family to be terminated,11 some PHAs may nevertheless be reluctant to pay if they have been recently experiencing funding shortfalls.

Tenants, advocates or PHAs with questions or prob-lems should contact Plaintiff’s counsel, Micky Ryan of the Oregon Law Center, at (800) 898-5594 x147, or via e-mail at [email protected]. n

Post-Rucker Decisions: Three Years Later

There have been several reported court and hearing offi cer decisions regarding evictions from assisted hous-ing and terminations of vouchers which applied to or have been impacted by the Department of Housing and Urban Development v. Rucker decision.1 Several of these decisions have already been summarized in previous issues of the Housing Law Bulletin;2 this article provides advocates with an overview and update of more recent decisions.

These decisions do not fi t into any neat pattern. One court found that the criminal activity of the guest must be current to justify an eviction. Another reviewed the decision of a public housing agency (PHA) and found

1Dep’t of Hous. & Urban Dev. v. Rucker, 535 U.S. 125 (2000). 2NHLP, One Strike Evictions: Post Rucker Decisions, 32 HOUS. L. BULL. 201 (2002).


that failure to consider mitigating circumstances was an abuse of discretion. In other cases, courts have felt com-pelled to enforce Rucker despite mitigating circumstances. Several decisions have interpreted Rucker in the context of other applicable laws, including state law and a consent decree. And in one case, a challenge to the HUD regula-tions regarding the termination of voucher assistance for criminal activity was rejected and a tenant won a voucher termination hearing because the PHA failed to submit suf-fi cient evidence to support the allegation.

Criminal Conduct of a Guest Must Be Current to Justify an Eviction

The Missouri Court of Appeals, in Wellston Housing Authority v. Murphy, affi rmed the circuit court’s holding that a housing authority could not evict a public housing tenant based upon the extensive criminal record of a guest, where the guest’s criminal activity occurred prior in time to the individual becoming a guest of the tenant and did not occur during the term of the tenant’s lease.3

Tenant Murphy entered into a lease with Wellston Housing Authority (WHA). The lease agreement contained a provision which allowed WHA to terminate a lease for criminal activity “by the tenant, any household member, a guest, or other person under the tenant’s control.”4

WHA became aware that Marilyn Murphy was being visited by Morris Lockett, who allegedly had an extensive criminal record. It was not until Murphy inquired about adding Lockett to the lease that WHA explained he was barred from the property because of his past record. Mur-phy agreed not to allow Lockett on the premises. Despite this agreement, Lockett visited with Murphy. As a result, WHA had him arrested for trespassing. Subsequent to Lockett’s arrest, WHA sent Murphy a termination notice. The notice gave alternative reasons for the eviction. First it indicated she was being evicted for having an unau-thorized male with a criminal record residing in the apart-ment. Alternatively, the notice provided that the tenancy was terminated because the tenant invited a male with a

3Wellston Hous. Auth. v. Murphy, 131 S.W.3d 378, 381 (2004). 4Id. at 379.

5Id. at 380.6Id. at 381.7Id.8Alich v. Dakota County. Comm. Dev. Auth., No. C4-02-818, 2003 WL 230726, at *2 (Minn. App. Ct. Feb. 4, 2003).9Id. 10Alich, supra note 8, at *1.1124 C.F.R. § 982 (c)(2)(i) (2005).

criminal record to visit after being told to refrain. Murphy refused to vacate the premises and WHA fi led an unlaw-ful detainer action against her.5

WHA asserted two arguments against Murphy. First, it argued that it could evict Murphy because of the exten-sive criminal history of her guest. In support of this claim, WHA argued that pursuant to 42 U.S.C. § 1437d (l)(6), it had the authority to terminate a tenancy if a guest under the tenant’s control engaged in “any criminal activity” and posed a threat to the public housing residents and their rightful enjoyment of the property. The court rejected this argument concluding that the statute did not extend so far as to include criminal conduct that occurred prior to the tenant’s lease term.6

Second, WHA asserted that terminating Murphy’s lease for permitting Lockett on her premises was synony-mous with the authority it has to prohibit persons with criminal records to reside in its units or to enter onto the property altogether. The court rejected this argument, too. It stressed that WHA’s right to prohibit Lockett from enter-ing the premises is separate and distinct from the rights to terminate Murphy’s lease.7

Housing Authority Must Consider Relevant Circumstances in Non-Criminal Case

In Alich v. Dakota County Comm. Dev. Auth.,8 the Min-nesota Court of Appeals reviewed the facts and deter-mined that the Dakota County Community Development Authority (CDA) failed to consider all relevant and miti-gating circumstances and thus acted in an arbitrary and capricious manner.9

Tenant June Alich informed the CDA that she was get-ting married and would no longer require housing assis-tance. Less than a week later, she called back informing the CDA that her marriage was off and asked if she could remain in the program. However, CDA terminated her voucher the day she called. Alich sought review by certio-rari against the CDA’s decision to terminate her assistance under the Section 8 Housing Choice Voucher Program.10

Citing Rucker, the court recognized that CDA had the discretion to determine when a termination of assistance is appropriate. It then interpreted the governing HUD regulation11 as directing a PHA to “consider all relevant

In other cases, courts have felt compelled to enforce Rucker

despite mitigating circumstances.


circumstances such as the seriousness of the case”12 before terminating such a vital subsidy. In reviewing the circum-stances, the court found Alich had historically complied with her housing requirements and that the CDA was not in a detrimental position as it had not yet rewarded her voucher to another eligible participant nor had it can-celled the contract with her landlord.13 As a result, the court found that CDA’s actions were arbitrary and capri-cious especially in light of the purposes of the Section 8 program and reinstated the tenant’s voucher.

This decision is consistent with HUD directives to housing authorities to consider relevant circumstances and to exercise discretion in a judicious manner.14

Courts Sustain Evictions Despite Mitigating Circumstances

Lowery v. Housing Authority of the City of Terre Haute15 involved a disabled father who lived with his two minor children. The court noted that the housing authority sought eviction for violation of the lease, which prohib-ited boarders, disturbing the peaceful enjoyment of other residents, and criminal activity of the tenant, members of the household or guest that threatens the health, safety or right to peaceful enjoyment of the premises by other resi-dents or employees.

On appeal, the tenant objected on due process grounds to the fact that his stepson, who had been staying in the ten-ant’s unit, was placed on a list of banned persons and pro-hibited from entering the housing authority property. The court dismissed that argument as well as an argument that the tenant was denied due process in the eviction action because it found that the tenant did not request a grievance hearing in the eviction action in a timely manner.

12Alich, supra note 8, at *2. Other courts and judges have also found that all of the surrounding circumstances must be considered by the housing authority or the court. See e.g., Powell v. Housing Authority of the City of Pittsburgh, 571 Pa. 552, 812 A.2d 1201, 1217 (2002) (concurring opinion, “it is incumbent on PHAs to consider “all relevant circumstances” before terminating a family’s assistance based on the errant conduct of less than all of its members.”); Oakwood Plaza Apts. v. Smith, 800 A2d. 265 (N.J. Super. Ct. App. Div. 2002) (remand to trial court to determine if Section 8 landlord had considered certain factors). See also State ex rel. Mary Smith v. Hous. Auth. of St. Louis County, 21 S.W.3d 854 (Mo. Sup. Ct. 2000) (Court, pre-Rucker, reviewed housing authority’s action—under state law provision regarding a review of agency hearing—and found that the housing authority abused its discretion because it failed to consider mitigating circumstances). 13Alich, supra note 8, at 2.14Letter from Mel Martinez to Public Housing Directors (April 16, 2002), available at http://www.nhlp.org/html/pubhsg/rdcases.htm; Letter from Assistant Secretary Michael Liu to Public Housing Directors (June 6, 2002), available at http://www.nhlp.org/html/pubhsg/rdcases.htm.15Lowery v. Hous. Auth. of the City of Terre Haute, 826 N.E.2d 685 (Ind. App. 2005).

16Id. at 689.17Id. at 687.18“[I]t does not appear that [the stepson’s] problems are drug-related, arguably invoking the strict liability implications of Rucker.” Id. at 690.19Id. at 689.20Id. at 690. Elsewhere in the opinion the court noted that the property manager stated that the tenant stated that he did not know how to make his stepson leave the premises. Id. at 686.21Id. at 690. The court also speculated the tenant could have added the stepson to the lease but chose not to so as to avail himself of his generous rent subsidy. Such speculation was not warranted since it was clear that TCHA would not have allowed the stepson to be added to the lease. 22Royal Oak Apts. v. Stolt, 155 N.C.App. 221, 573 S.E.2d 773, 2002 WL 31894957 (2002).

With respect to the activity of the stepson, the court danced around the law and the facts. It noted that the ten-ant did not admit that his stepson engaged in any crimi-nal activity.16 Throughout the opinion, there are references only to disturbances at the neighboring school and the manager witnessing “an altercation in which several young men were threatening” the stepson who was stand-ing outside of the tenant’s apartment.17 The court did note that the problems were not drug related so that the strict liability provisions of Rucker were not implicated.18

Next the court looked at the issue of whether the ten-ant violated the lease by admittedly allowing his stepson to reside in the unit for “about a month” despite notices and warnings issued by the PHA regarding the stepson.19 The court found that this act by the tenant was grounds for termination despite the fact that the court recognized that “it was not apparent from the record that [the tenant who was physically infi rmed] could exert physical control over [the stepson]” to prevent him from entering the TCHA premises.20 Moreover the court noted that the housing authority could have taken out a restraining order against the stepson to prevent his entry. Despite these musings, the court rested its affi rmation of the trial court decision on the fact that “there is evidence from which the trial court could infer that [the tenant] allowed or invited [the stepson] to return to the apartment.”21

In Royal Oak Apartments v. Solt,22 the Court of Appeals of North Carolina cited the Rucker standard, which denies an innocent tenant defense, but nevertheless considered

The Alich decision is consistent with HUD directives to housing authorities to consider

relevant circumstances and to exercise discretion in a judicious manner.


and rejected tenant Melissa Solt’s defense that she could not control the violent actions of her ex-husband.23 Solt moved into the Royal Oak apartments and at the time did not reside with her estranged husband, Travis Eddie. Although they were legally separated, Eddie resided with Solt on occasion and was considered a “guest” under the terms of the lease. On two separate occasions, which were four days apart, Eddie got into violent confronta-tions, once with Solt’s neighbor and the other with Solt. Both required the summoning of law enforcement. After the fi rst confrontation, Royal Oak sent Solt “A Notice of Lease Violation” and verbally warned her that “any future misconduct on the part of her guest would result in the termination of her lease.” After the second confrontation, Royal Oak gave Solt a notice to quit and informed her that her lease was about to expire and would not be renewed.24 The trial court found that during the relevant period of time, Solt permitted Solt to live with her “on and off.”

In light of Rucker, the court upheld her eviction, stat-ing that Solt had a responsibility to live up to her end of the lease agreement and exclude her ex-husband, whom she knew had violent tendencies, from the premises.25 Though the court acknowledged the severity of the ruling, it affi rmed the trial court’s eviction decision. The court of appeals’ emphasis on Solt’s responsibilities belies the fact that Solt asserted that she had no control over her former husband and the fact that it took six police offi cers to sub-due Eddie.

Courts Interpret Rucker in the Context of State Laws and a Consent Decree

Consent DecreeIn Brown v. Philadelphia Housing Authority,26 the Phila-

delphia Housing Authority moved to vacate the Brown consent decree, claiming that subsequent changes in fed-eral regulations and statutes warranted revision of the

23Id. at *6. 24Id. at *3.25Id.26Brown v. Philadelphia Hous. Auth., 237 F. Supp. 2d 567 (E.D. Pa. 2002).

27Id. at 568.28Id. at 573.29Id. at 577.30N.Y. City Hous. Auth. v. Taylor, No. 2004-511KC, 6 Misc.3d 135(A), 800 N.Y.S.2d 351 (Table), 2005 WL 433299, at *1 (N.Y. Supp .App. Term Feb. 18, 2005). 31Id.32Id. 33Id.

Brown decree.27 Brown is a civil rights action brought by Philadelphia Housing Authority tenants nearly thirty years ago regarding tenants’ rights to a hearing prior to eviction. One of the provisions that the PHA objected to was its obligation under the Brown decree to afford tenants who allegedly have engaged in violent or drug-related criminal activity a grievance hearing prior to eviction.

The Philadelphia Housing Authority made several arguments, one of which focused on the inconsistency between Rucker and the Brown decree. The court rejected this argument. In its analysis, it concluded that although Rucker allows for greater fl exibility to evict tenants associ-ated with drug-crime related activities, it “does not make any of the obligations of the Brown decree impermissible under federal law.”28 Moreover, the Brown decree does not have any effect upon whom the Philadelphia Housing Authority may evict. The court also noted that none of the changed circumstances the Philadelphia Housing Author-ity alluded to as justifi cation for vacating the Brown decree were unforeseen. For example, the court found that “[i]t is not unforeseeable that an agency like HUD would work to clarify or modify its regulations in respect to public housing assistance.” In addition, the Philadelphia Hous-ing Authority failed to show any inconsistencies between federal law and the Brown decree.29

Interpretation of Rucker with Applicable State LawIn New York City Housing Authority v. Taylor,30 the

Supreme Court, Appellate Term, 2nd and 11th Judicial Dist, reversed the civil court decision dismissing the petition against tenant Oreather Taylor. Taylor resided in a devel-opment that required tenants to sign a lease agreement, indicating their promise to be responsible for the behavior of their household members. Taylor’s son was convicted of selling crack cocaine to an undercover police offi cer in the building. Police executed a search warrant and obtained a gun, bullets, additional illegal substances and a large sum of money.31 The New York City Housing Authority then commenced an eviction proceeding. 32

The civil court found that the NYCHA had failed to show that the premises were used to operate an illegal business and that the tenant “had reason to know of the activity and acquiesced therein.”33 The court disagreed

The court upheld an eviction, stating that the resident had a responsibility to live

up to her end of the lease agreement and exclude her ex-husband, whom she knew

had violent tendencies, from the premises.


and reversed, fi nding Taylor responsible for her son’s ille-gal activity. The court determined that Taylor must have had knowledge of the activities that occurred in her apart-ment and to have acquiesced.34

In another case,35 88-09 Realty, LLC v. Hill, the Supreme Court, Appellate Division, 2nd Department, applied the standard of “knowledge and acquiescence” established in case law developed in New York City courts and held that the landlord had met its burden in establishing that Pris-cilla Hill’s son was using her apartment for drug dealing.36 The court also noted that her son’s activities “persisted over such a period of time and were the subject of com-plaints by people in the community as to give an infer-ence that the appellant knew or should have known of the activities, and acquiesced therein.”37 Two years later, in Satterwhite v. Hernandez,38 the New York Supreme Court, Appellate Division, First Department, held that the pen-alty of terminating Connie Satterwhite’s public housing tenancy on the ground of non-desirability was supported by substantial evidence and did not “shock the con-science.”39 Police offi cers found drugs which were both in plain view and hidden and ammunition in the apartment, thus supporting good cause for her eviction.40

In another New York case, B&L Associates v. Wakefi eld, the Civil Court, New York City, Kings County declined to follow the cases, such as 88-90 Realty, that required “knowledge and acquiescence” and determined that the “no fault” eviction standard of Rucker applied.41 The court concluded that Melissa Wakefi eld’s landlord had suc-cessfully established a prima facie case against her and awarded possession. Despite the fact that the court stated that it would not recognize her defense of lack of knowl-

34Id. 3588-09 Realty, LLC v. Hill, 305 A.D.2d 409, 757 N.Y.S.2d 904, N.Y. Slip Op. 13848 (2003).36Id. at 905.37Id.38Satterwhite v. Hernandez, 16 A.D.3d 131, 790 N.Y.S.2d 124 (2005).39Id. at 125.40Id. 41B&L Assocs. v. Wakefi eld, 785 N.Y.S.2d 681, 683 (2004).

42Id.43Boston Hous. Auth. v. Figueroa, No. 02-SP-03297, 2002 WL 24029487, at * 2 (Mass. Hous. Ct. Oct. 10, 2003).44Spence v. Gormley, 387 Mass. 258, 439 N.E.2d 741 (1982). 45Boston Housing Authority v. Figueroa, supra note 43, at *4. 46Id. at *5.47Id. at *5, note 6.

edge, the court then considered the tenant’s defense. Ulti-mately, however, the court concluded that it did not fi nd Wakefi eld’s testimony credible.42

Court Rejects State Law Innocent Tenant Defense

The facts in Boston Housing Authority v. Figueroa are undisputed. Wanda Figueroa was a tenant at the Cathedral public housing development. Figueroa’s son, a household member, had been involved in various criminal incidents, including an armed robbery of a deliveryman at the devel-opment. In compliance with its policy, the Boston Hous-ing Authority (BHA) conducted a private conference to discuss Figueroa’s son and his violation of the lease. After the discussion, the BHA decided to terminate Figueroa’s lease based on the continuous threat the son posed to the development. Subsequently, Figueroa exercised her right to a grievance hearing.43

The Massachusetts Housing Court found that Rucker preempted the state law “special circumstances” or inno-cent tenant defense articulated in the Massachusetts state case Spence v. Gormley.44 It found that such a defense “in a state public housing eviction case would frustrate or stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress as deter-mined by the Supreme Court in Rucker.”45 Moreover the court concluded that even if Figueroa were not precluded from asserting the Gormley defense, evidence suggested she could have foreseen and prevented her son’s criminal behavior.46

The court also noted that public housing authorities have broad discretion under the one-strike statute and are not required to evict every tenant. Housing authorities can consider the totality of the circumstances. Signifi cantly, the court stated that a housing authority’s discretion is not boundless. A state court can review and determine if a housing authority exercised “discretion in an unfettered manner that violated federal law or principles of due process.”47 However, in Figueroa, because the tenant had received a grievance hearing, the court concluded that both federal law and due process were satisfi ed.

Figueroa’s son was subsequently charged and sen-tenced to six years in prison on drug and fi rearm posses-sion convictions. Figueroa argued that her son no longer

In 88-09 Realty, LLC v. Hill, the court applied the standard of “knowledge and

acquiescence” and held that the landlord had met its burden.


posed a threat to the residents of her community. The court rejected this argument too on the assumption that her son, who had returned to the premises after the inci-dent and before incarceration, would most likely return to the development upon his release from prison.48

Public Housing Tenant Entitled to a Grievance Hearing for Drug and Gun Allegations

The federal regulations provide that a PHA may exclude from the grievance procedures any grievance that involves criminal activity that threatens the health and safety of other residents or employees of the PHA, any violent or drug-related criminal activity on or off the premises, or any criminal activity that resulted in the felony conviction of a family member.49 Pursuant to Mas-sachusetts law and the Boston Housing Authority (BHA) tenant grievance procedures, “a public housing tenant is not entitled to a grievance hearing in cases of eviction if there is reason to believe that a tenant or her household member, on or adjacent to BHA property, has possessed, car-ried or illegally kept a weapon . . . .”50 In Boston Housing Authority v. Perez, the Boston Housing Court contrasted this language with the language in the United States Hous-ing Act regarding conduct “on or off” housing authority premises. The court found that possession of a gun by a resident within three-quarters of a mile of BHA property is not adjacent. Because the tenant was not provided with a grievance hearing and the notice to quit stated that she was not entitled to a grievance hearing, the court granted tenant’s motion for summary judgment and dismissed the BHA’s complaint for possession.51

Voucher Tenant Wins Termination Hearing Because of Lack of Evidence

The Sacramento City and County Housing Author-ity (SHA) sought to terminate the voucher of a tenant for the alleged violent criminal activity of her son which took place sixty miles from the tenant’s home. The hous-ing authority based its entire case on a newspaper article which described the shooting death of a police offi cer during the chase of two robbery suspects but did not mention the son’s name. There was no evidence submit-ted as to what the SHA did to confi rm the information.

48Id. 4924 C.F.R. § 966.51(2)(i) (2005).50Boston Hous. Auth. v. Perez, No. 05-SP /0/1/7/8/0, slip op. at 4 (Mass. Hous. Ct., Boston, August 5, 2005) (emphasis added). Compare Powell v. Hous. Auth. of the City of Pittsburgh, infra note 53 (discussing the term “immediate vicinity”).51Perez, slip op. at 7.

52Housing Authority of the City of Sacramento and the Housing Author-ity of the County of Sacramento, decision August 1, 2005. (The hearing offi cer cited Rucker, was confused about the distinction between the voucher program and public housing, but noted that Rucker was not applicable to off-site terminations for non-drug-related criminal activ-ity.)53Powell v. Hous. Auth. of the City of Pittsburgh, 571 Pa. 552, 576 (2002).54Id. at 557.

When asked what steps SHA took to determine whether to exercise discretion to allow the non-offending members to continue to participate in the program, the SHA could produce no evidence of such evaluation. Based on these fi ndings, the hearing offi cer declined to sustain the pro-posed termination.52

Court Affi rms Voucher Termination for Criminal Activity of Son

In Powell v. Housing Authority of the City of Pittsburgh, the Supreme Court of Pennsylvania held that a PHA has the authority to terminate a Housing Choice Voucher for violent criminal conduct of a household member without proving that the conduct is an actual threat to the “health, safety, or right to peaceful enjoyment of premises by other residents…or of persons residing in the immediate vicin-ity.” 53

Tenant Beverly Powell resided with her three sons and had a voucher issued by the housing authority. She signed a “family obligations” certifi cate for her voucher that allowed the housing authority to terminate her tenancy if any member of her family engaged in “drug related crimi-nal activity, or violent criminal activity.” Thereafter, two of Powell’s three sons carjacked a vehicle from a supermar-ket a mile from Powell’s housing unit by pepper spraying the elderly occupant and physically removing her from the car. The Housing Authority of the City of Pittsburgh terminated Powell’s subsidy, citing she was in violation of the “family obligations” provision.54

In her defense, Powell asserted two arguments: fi rst, that the statute did not authorize the PHA to terminate the voucher for criminal activity, and, second, that the regula-tion exceeded the scope of the voucher statute because it allowed for termination for any criminal activity and did not limit the cause to criminal activity in the immediate

In Powell, the Supreme Court of Pennsylvania held that a PHA has may terminate a Housing Choice Voucher for violent criminal conduct of

a household member without proving that the conduct is an actual threat.


vicinity of the premises. The Supreme Court considered and decided only the latter argument.55

The Supreme Court applied the Chevron test for determining the lawfulness of the regulation.56 The court therefore fi rst looked to determine if Congress directly addressed the issue.

“If the intent of Congress is clear, that is the end of the matter . . . . [I]f the statute is silent or ambigu-ous with respect to the specifi c issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute. Where the legislative delegation to an agency to fi ll a gap is implicit, rather then explicit, a court may not substitute its own construction of a statu-tory provision for the agency’s ‘reasonable inter-pretation.’”57

Appling these standards, fi rst the court reviewed the legislative history of the voucher statute and determined that Congress in 1990 never addressed whether a housing authority had the authority to terminate voucher benefi ts for criminal activity only if such activity was in the imme-diate vicinity of the premises.58 When applying the second prong of analysis in accordance with Chevron, the court determined that the regulation—which permits a hous-ing authority to terminate a voucher without fi nding that the criminal activity was in the immediate vicinity of the premises, as is dictated by 42 U.S.C. § 1437f(d)(1)(B)(iii) when a landlord is evicting a tenant—is a permissible construction of the voucher statute and thus is entitled to deference.

The court stated that “if a PHA were only permitted to terminate assistance for activities on or near the assisted premises, the deterrent effect of this policy would be sub-stantially diminished because the family could lease hous-ing outside the area where the family member engages in the proscribed activities.”59 In addition, the court con-

55Id. at 565-566.56Chevron USA, Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984).57Powell v. Hous. Auth. of the City of Pittsburgh, supra note 53, at 564.58Id. at 570.59Id.

cluded that without this regulation, the housing author-ity would be required to continue to assist families that it was prohibited from accepting into the voucher program. Thus, the regulation fi lled a gap in the statutory frame-work in a reasonable manner and was therefore entitled to deference.

Conclusion

Many of the decisions discussed above stress the importance of federally subsidizing housing programs and how they are serving a need. Although Rucker enforced a simple standard, the courts seem willing to consider ten-ant defenses of lack of control or lack of knowledge and whether a housing authority or landlord has exercised its discretion and considered the circumstances surrounding the alleged violation. In many cases however, even though the court considers the tenant’s defense, the court orders or upholds eviction or termination. n

Many of the decisions stress the importance of federally subsidizing housing programs

and how they are serving a need.

Recent CasesThe following are brief summaries of recently reported

federal and state cases that should be of interest to housing advocates. Copies of the opinions can be obtained from a number of sources including the cited reporter, Westlaw,1 Lexis,2 or, in some instances, the court’s Web site.3 Copies of the cases are not available from NHLP.

Eviction — Defenses;Fair Housing — Reasonable Accommodation

Douglas v. Kriegsfeld Corp., 2005 WL 2600210 (D.C. Oct. 13, 2005) (en banc) (not yet released). In this currently

1http://www.westlaw.com.2http://www.lexis.com.3For a list of courts that are accessible through the World Wide Web, see http://www.uscourts.gov/links.html (federal courts) and http://www.ncsc.dni.us/COURT/SITES/courts.htm#state (for state courts). See also http://www.courts.net.


Recent Housing-Related Regulations and Notices

The following are signifi cant affordable housing-related regulations and notices that the Department of Housing and Urban Development (HUD) and the Depart-ment of Agriculture’s (USDA) Rural Housing Service (RHS) issued in October of 2005. For the most part, the summaries are taken directly from the summary of the regulation in the Federal Register or each notice’s introduc-tory paragraphs.

Copies of the cited documents may be secured from various sources, including (1) the Government Printing Offi ce’s Web site on the World Wide Web,1 (2) bound vol-umes of the Federal Register, (3) HUD Clips,2 (4) HUD,3 and (5) USDA’s Rural Development Web page.4 Citations are included with each document to help you secure copies.

HUD Federal Register Final Rules

70 Fed. Reg. 59,892 (Oct. 13, 2005)Project-Based Voucher Program

Summary: This rule replaces the current project-based certifi cate regulations with a comprehensive new project-based voucher program. This rule is based on statutory authorities enacted in 1998 and 2000, and follows a pro-posed rule and public comment.

Effective date: November 14, 2005.

70 Fed. Reg. 61,366 (Oct. 24, 2005)Revisions to the Public Housing Operating Fund Program; Correction to Formula Implementation Date

Summary: This document corrects HUD’s fi nal rule published on September 19, 2005, that implements revi-sions to the public housing Operating Fund Program. The fi nal rule includes dates from the proposed rule that assumed both an initial implementation of the revised for-mula in Fiscal Year 2006 and a one-year period for PHAs to transition to the new formula. In converting the rule from a proposed to fi nal rule, HUD unintentionally failed to revise certain dates to refl ect the updated schedule for implementation of the revised formula. Accordingly, the September 19, 2005, fi nal rule inadvertently denies PHAs the one-year transition period. This document corrects the

1http://www.access.gpo.gov/su_docs.2http://www.hudclips.org/cgi/index.cgi.3To order notices and handbooks from HUD, call (800) 767-7468 or fax (202) 708-2313.4http://www.rdinit.usda.gov/regs.

unreleased opinion, an en banc panel of the District of Columbia Court of Appeals reversed the trial court’s decision to bar a discrimination defense asserted by a Defendant-Appellant tenant in an eviction action. Plaintiff-Appellee landlord sought eviction of Defendant-Appel-lant for Defendant-Appellant’s failure to maintain her unit in clean and sanitary condition. Defendant-Appellant had requested through counsel a stay of the eviction pro-ceedings in order to clean her unit and eventual dismissal of the proceedings if the unit remained in sanitary condi-tion as a reasonable accommodation of her alleged mental disability.

Federal Courts — Sovereign Immunity;Lead Paint

Cudjoe v. Dep’t of Veterans Affairs, 2005 WL 2559713 (3rd Cir. Oct. 13, 2005). In this suit by a minor resident of an apartment building allegedly owned by the Department of Veterans Affairs for injuries related to lead paint expo-sure, the Third Circuit held that the waiver of sovereign immunity contained in the Toxic Substances Control Act, 15 U.S.C. § 2688, did not apply to a cause of action for triple damages under the Residential Lead-Based Paint Hazard Reduction Act, 42 U.S.C. § 4852d(b)(3).

Multifamily Housing Preservation

Carabetta Enters., Inc. v. United States, 2005 WL 2757523 (Fed. Cl. Oct. 19, 2005). The Court of Federal Claims awarded $18.3 million to Plaintiff owners and managers of Section 221(d)(3) and 236 multifamily housing properties after a bench on damages. Plaintiffs fi led suit against Defendant United States for breach of contract for Defendant’s failure to provide guaranteed loans for several properties owned by Plaintiffs. See also Carabetta Enterprises v. United States, 58 Fed. Cl. 563 (2003) (order on parties’ cross-motions for summary judgment).

United Manor, Ltd. v. United States, 2005 WL 2995375 (Fed. Cl. Oct. 31, 2005). Citing, inter alia, Franconia Assocs. v. United States, 536 U.S. 129 (2002), and Alder Terrace v. United States, 161 F.3d 1372 (Fed. Cir.1998), the United States District Court for the Eastern District of Pennsylva-nia ruled that Plaintiff Section 236 property owner’s tak-ings challenge to federal prepayment restrictions accrued not on the date of the passage of the Low Income Hous-ing Preservation and Resident Homeownership Act of 1990, 12 U.S.C. §§ 4101-4147, but on its later twenty-year mortgage anniversary date. The court denied Defendant United States’ motion to dismiss Plaintiffs’ claim as time-barred. n


that have been waived in order to facilitate the delivery of safe and decent housing under these programs to fami-lies and individuals who have been displaced from their housing by Hurricane Katrina.

Effective Date: September 27, 2005.

70 Fed. Reg. 58,942 (Oct. 7, 2005)HUD’s Draft Section 504 Self-Evaluation Report on HUD-Conducted Programs and Activities; Reopening of Comment Period

Summary: On June 22, 2005, HUD published a notice in the Federal Register soliciting comments on its draft Sec-tion 504 self-evaluation report of HUD-conducted pro-grams, activities, and regional offi ce facilities. The draft report was prepared consistent with HUD’s responsibili-ties under Section 504 of the Rehabilitation Act of 1973, as amended, and under HUD’s implementing regulations. The public comment period closed on July 22, 2005. HUD has received numerous requests to re-open the period for public comment. This notice announces the re-opening of the public comment period on the Section 504 draft self-evaluation report.

Comment Due Date: November 7, 2005.

70 Fed. Reg. 61,298 (Oct. 21, 2005)Notice of Certain Operating Cost Adjustment Factorsfor 2006

Summary: This notice establishes annual factors used in calculating rent adjustments under Section 524 of the Multifamily Assisted Housing Reform and Affordabil-ity Act of 1997 as amended by the Preserving Affordable Housing for Senior Citizens and Families into the 21st Century Act of 1999, and under the Low-Income Housing Preservation and Resident Homeownership Act of 1990.

Effective date: February 11, 2006.

HUD PIH Notice

Notice PIH 2005-33 (HA) (October 25, 2005)Reissuance of Section Eight Management Assessment Program (SEMAP) Guidance to HUD Field Offi ces Assisting SEMAP Troubled, Near-Troubled and Non-Troubled PHAs

Summary: This notice reissues Notice PIH 2004-16 and provides guidance for Hub Directors and Program Center Coordinators to follow in assisting Public Housing Agencies determined troubled or non-troubled under the SEMAP for the Housing Choice Voucher Program.

Expires: October 31, 2006. n

September 19, 2005, fi nal rule to provide that the revised allocation formula will be implemented for calendar year 2007, and adjusts the related dates specifi ed in the rule to refl ect the corrected implementation date.

Effective date: The fi nal rule is effective on November 18, 2005.

HUD Federal Register Proposed Rules

70 Fed. Reg. 64,746 (Oct. 31, 2005)Semiannual Regulatory Agenda

Summary: In accordance with Section 4(b) of Execu-tive Order 12866 “Regulatory Planning and Review,” as amended, HUD is publishing its agenda of regulations already issued or that are expected to be issued during the next several months. The agenda also includes rules cur-rently in effect that are under review and describes those regulations that may affect small entities, as required by Section 602 of the Regulatory Flexibility Act. The purpose of publication of the agenda is to encourage more effec-tive public participation in the regulatory process by pro-viding the public with early information about pending regulatory activities.

HUD Federal Register Notices

70 Fed. Reg. 57,654 (Oct. 3, 2005)Final Fair Market Rents for the Housing Choice Voucher Program and Moderate Rehabilitation Single Room Occupancy Program for Fiscal Year 2006

Summary: This notice provides fi nal FY 2006 fair mar-ket rents (FMRs) for all areas that refl ect the estimated for-tieth and fi ftieth percentile rent levels trended to April 1, 2006. However, it does not include fi nal determinations on 50th percentile rent levels, as proposed in HUD’s notice published on August 25, 2005. The thirty-day public com-ment period on that notice ended September 26, 2005, and HUD is evaluating the public comments. A notice that provides fi nal determinations on fi ftieth percentile FMRs will be issued subsequently, and as further discussed in Section VII of this notice. This notice also invokes the Secretary’s authority to waive regulatory requirements for exception FMRs in areas affected by Hurricane Katrina and by displacement of residents of the affected area.

Dates: The FMRs published in this notice are effective on October 1, 2005.

70 Fed. Reg. 57,716 (Oct. 3, 2005)Regulatory and Administrative Waivers Granted for Public and Indian Housing Programs to Assist with Recovery and Relief in Hurricane Katrina Disaster Areas

Summary: This notice advises the public of HUD reg-ulations and other administrative requirements govern-ing HUD’s Offi ce of Public and Indian Housing programs


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